Treasury services: leading customers toward the Web; banks and other vendors are eagerly pushing Web-enabled services, but experts say a lot of companies seem perfectly content for now with their old dial-up systems. (Banking).

At the Association for Financial Professionals convention in New Orleans this past fall, major banks and software vendors vied for attendee attention with elaborate booths, sharp-looking computer displays and the usual assortment of corporate trinkets. One big focus at the booths: Web-based treasury technology.

While some of these products were new and splashy, it appears that it may take real salesmanship to gain a lot of converts. Research and interviews with industry experts suggest that many companies are satisfied with their existing treasury technology--even if it's delivered by modem--and aren't rushing to sign up for Web-enabled versions.

That may change, but the recent recession and its dampening effect on technology spending appears to have made companies more likely to stand pat--especially if converting to a Web product looks to be a lengthy or expensive event.

"The Web is just replacing the modem--they're bringing their new customers to the Web and converting the old from dial-up to the Web," says Ken Parkinson, a partner at Treasury Information Services in Hopewell, N.J. "But that conversion is a big, messy project. Probably, the smaller and older the customer, the slower they get converted.

"Most companies are comfortable with what they're getting now," Parkinson adds. "Banks are easy to work with on dial-up--companies aren't getting more on the Web, but they are getting it more easily. But in terms of [exciting] customers by giving them more power--I haven't seen it. Most banks are need-fillers rather than need-creators."

A survey done last year by Treasury Strategies Inc., a Chicago-based treasury consulting firm, found that Web enablement of treasury functions is progressing, but relatively slowly. Less than a third of respondents have implemented and used a treasury intranet, even though companies using them find that they facilitate collection of cash flow forecasts in standardized formats. And only 12 percent of respondents plan to implement a treasury intranet.

Among those using treasury management systems, only a third are utilizing Web-based features of these products, the survey found. Yet Treasury Strategies argues that "the Internet offers real benefits to lean treasury organizations, [and] the various Web-based products and features available to a company should be considered thoroughly for maximum treasury effectiveness."

Certainly, corporate customers looking for Web-enabled treasury solutions don't have to look far. Big banks are clearly angling for a larger piece of the corporate treasury business and have been adding Web-enabled services to their previous slate of workstation technology. At North Carolina-based Wachovia Corp., Laurence Leinbach Jr., senior vice president in the Treasury Solutions division, talks about how its Web products allow transactions and reporting--with exception processing a key item.

Leinbach says the bank's browser-based solution can be delivered via multiple channels. Customers don't even have to go through the Internet, but can access the data through a personal digital assistant (PDA), like a Blackberry or a wireless device. "Our goal is flexibility and 24-7 availability" he says; the bank can also set up protocols to send email notification of event.

Paul Hyson, a manager for treasury services in Wachovia's Product Solutions Group, says the bank has had a North American Free Trade Agreement (NAFTA) treasury product and has enhanced that with a relationship with the Bank of Montreal.

One key product here, he says, facilitates administration of letters of credit over the Internet. Administration comes through a dedicated unit, with global account managers in Atlanta, he says, adding that Wachovia is also building on the "domiciled strength" of First Union Corp. (its merger partner in 2000) in London.

"We don't want to be brick and mortar around the world," Hyson says, but Wachovia is planning to roll out service in South America, Australia, New Zealand, Japan and China in coming months. Its focus is on middle-market and larger companies.

JP Morgan Treasury Services is touting its eCare [TM] program, a series of online tools that includes a platform for initiating inquiries, investigations and obtaining information online; an email inquiry system to get same-day or time-critical event information; a setup program for doing account administration and setup procedures via self-service; and a secure email protocol conveying sensitive information.

Independent technology vendors are competing avidly for the same business. Interestingly, some of the biggest players are European companies that developed a following there before bringing their wares across the Atlantic--companies like XRT, Trema and SimCorp.

European systems, says Parkinson, "were developed as interactive and simplistic systems, because a lot of treasury [operations] are simple; the complication comes in the need for [dealing with] cross-border transactions. In the U.S., the issues are different. There is a large intrinsic issue around the time value of money, managing the float, etc." He sees these European players as competing against other non-bank vendors, like SunGard Treasury Systems.

XRT, which debuted in France in 1983 as CERG Finance, claims to offer "the only solution that supports U.S. and European cash management conventions within a single application." It released its new XRT Enterprise Suite late last year, which it says gives corporations the ability to engage and manage a global network of customers and trading partners, and do business in multiple languages and currencies--all backed by enhanced management and reporting capabilities.

XRT uses client-server architecture, and has laid out a plan to make its products Web-only Java 2 Enterprise Edition (J2EE)-compliant, with most Web product releases scheduled for the first part of this year.

Founded in Finland in 1992, Trema is extolling its ability to provide straight-through processing through its Transaction HUB Service, which links banks and multi-bank portals with Finance KIT, Trema's treasury, risk management and asset management system. The HUB uses authentification certificates, SSL protocol and RSA encryption based on public-private keys. Trema also offers eKIT, a suite of Web-enabled modules for organizations already using Finance KIT, and mKIT, which provides mobile phone access to key Finance KIT functions.

SimCorp is another Scandinavian export, begun in Denmark in the 1970s. It also touts its latest straight-though processing system, IT/2, saying that new Internet/intranet technology enables remote use and "global access to all workflows." The system can be set up to allow subsidiaries to both post and access information "as if they were in the treasury department themselves," regardless of geography and time zone.

RELATED ARTICLE: 'Positive Pay' Gets Positive Notices

Few things bother a treasurer more than money that's been paid but can't be collected. So for Ed Morgan, treasurer of Mapco Express, a convenience store operator in the Southeast that does a heavy volume in money orders, an online system that allows for easy reconciliation of exception items has proven to be a big asset.

Mapco, based in Franklin, Tenn., has been using Positive Pay, a product from PNC Bank, since June to inspect exception items from the money orders it sells in its 236 stores in eight Southeastern states. "We wanted a solution that would help us limit our fraud, and provide an efficient platform for getting the necessary reconciliation done," Morgan said in an interview. Mapco Express was one of 18 commercial customers involved with Pittsburgh based PNC in a pilot of the system last year, says PNC spokeswoman Amy Vargo.

Other banks are in the positive pay arena, too. J.P. Morgan Chase which also calls its product Positive Pay(SM), is marketing it chiefly as way to combat check fraud. A particular focus of its system is the payee name, since "fraud artists have resorted to altering or modifying the payee name on stolen checks with valid serial numbers an amounts, says Edward Regina, vice president at JPMorgan Treasury Services.

JPMorgan's Payee Verification sys tem uses an advanced form of optical character recognition technology to scan the image of each check an read the printed payee name. The scanned name is then compared with the payee name transmitted to the bank as part of the issue file, o* is matched to the payee name located within an encrypted seal Printed on the face of the check when issued. Companies can obtain sea coding software from the bank to integrate into their check print processing.

As at PNC, the JPMorgan program is very new. The bank says that Payee Verification as been piloted at its Syracuse, N.Y., controlled disbursement site in 2002 and will be coming online this year at sites in New York City, Delaware and Texas.

At PNC, employees scan the checks or money orders created in the customer's program and provide easy access to those images online. This can be done through a bank-maintained or client-maintained system; in the latter, which Mapco has been using, PNC provides a daily file of paid money orders, typically transmitted to a desktop system the morning after the orders are presented for payment. The customer than compares the paid file to the database to identify mismatched items.

"We will research some items online," Mapco's Morgan says, noting that he has two staff people assigned to the task. "When the [actual] item or amount differ, we'll get online and view the image." Money orders and checks are scanned front and back, so the endorsement can be read. PNC also provides customers with CDs of archived clearings.

Morgan declines to discuss the actual volume of money orders, but says that something close to 1 percent generate exceptions, often because numbers aren't completely filled in and the bank's system isn't able to match them against existing accounts.

"Some of the credit card merchants make a partial payment, and they only key in the last four to five digits of check, rather than use the zeros that precede it in the account number," he says/

The program is effective against fraud, "which has become quite a bear to handle in the last couple of years," Morgan says, but it also offers customers better service by enabling Mapco to make sure that they get their money back if there is a problem.

Temple University in Philadelphia has been using a system from PNC since 2000 for its payroll and accounts payable areas, says associate treasurer Susan Karakantas. Initially, it was using the bank's Pinnacle disbursement suite - software that involved one person from payroll and one from A/P logging onto the system and checking for exception items.

But earlier this year, Karakantas says the university migrated to the internet-based Positive Pay. Now, four people from A/P and five from payroll can access the information right from their desktops-and it's considerably faster, with access to the scanned check image available at the click of an icon.

Karakantas says Temple sends a file to the bank almost every day with a sequence of checks it has cut. "As the checks clear, they are matched against those that are clearing in the issue file. If number on the check doesn't match, or the dollar amount doesn't match, we get an email," she says.

In a typical month, the university might cut some 16,000 checks to vendors and staff, and Karakantas says there is added piece of mind now, since Philadelphia has had a rash of check fraud. "We had a lot of fraud problems in prior years, but now that we have a positive pay system, [thieves] have stopped trying to hit us."

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